Microfinance Effectiveness In Solving Banking Problem

1105 words - 5 pages

Wilibrordus Armand Amadus
10/22/2010
Draft 3

Microfinance Effectiveness in Solving Banking Problem

Have you ever tried to borrow some money from a bank? It is actually a very simple thing to do, since one of the primary services of banking practices is lending money. When you need some money under any circumstances, you can just go to the bank, fill in the application, and talk to the loan officer about why you need the money and how you can repay it on time. In a couple days he will let you know whether you are approved for the loan or not. Although the procedure may sound effortless, getting a loan from the bank is an arduous task to do. The most typical problem is that the loan ...view middle of the document...

The first reason why microfinance is better in solving banking problems is it trusts poor people’s abilities to pay back their loan. For-profit banking practices do not want to engage in considerably risky loans where the borrowers do not have enough monthly income to reimburse their credits. On the other hand, Bornstein (2004) writes that social entrepreneurs recognize that separation from the past and reconstruction of current system is very important to produce innovation which leads to sustainable changes. Microfinance, founded by social entrepreneurs such as Muhammad Yunus, breaks away from standard banking practices and creates a new practice which is willing to lend money for the deprived. The article “Nobel Winner Yunus: Microcredit Missionary” (2005), says Bangladesh’s Grameen Bank was created upon Yunus belief that poor people can be skilled entrepreneurs and trustworthy debtors. All microfinance practices have an analogous belief. The underprivileged are not poor just because they are lazy, illiterate, or unable to plan their incomes. They lack capital to do something which can generate money. When they are given this opportunity, they could find their own way to have enough income to get themselves out of poverty and repay the money they owe.
Beside of their unstable financial status, ordinary financial practices do not want to loan to the deprived because they do not have enough collateral to be repossessed in case of a default loan. Standard financial practices are oriented in profit-making. When the borrowers are unable to pay their debt anymore, the bank needs to cover up their liability by repossessing their properties. If from the beginning the bank thinks that the borrowers do not have enough collateral, the bank will not agree to lend the money. However, the article “Nobel Winner Yunus: Microcredit Missionary” (2005) tells that when Grameen’s Bank borrowers start their first loan, 73% of them were terribly poor. In other words, most of the borrowers in Grameen Bank, which practices microfinance, do not have collateral when they borrow money for the first time. While standard financial practices are not comfortable to engage in this kind of unsafe situation, Dees (2007) writes that social entrepreneurs are willing to use any possible way to achieve sustainable results. As a result, even though it is a little bit risky, microfinance does not...

967 words - 4 pages
individuals and enterprises stood at (=N= 155.1million) all these are with share capital cash of (=N=239.8 million). To complement the efforts of microfinance banks in mobilizing the rural infrastructures and directorate for social mobilization (MAMSER) by virtue of their grass roots oriented programmes conducted extensive research into the introduction of the microfinance banking system in area that it will be of good benefit to the people. Okafor

1565 words - 7 pages
.
Statement of the Problem
The most rural population has remained largely unbanked. Rural entrepreneurs’ access to banking services in these areas has been hindered by the assumption that rural populations have low incomes which are not sufficient to sustain banking operations; hence most formal banks have shied away from offering banking services to rural areas for many years. Recently, commercial banks in collaboration with the mobile phone

2248 words - 9 pages
risks of microfinance would not effectively serve these institutions or the people who depend upon them. Therefore, bank supervisors should ensure that the supervisory framework in place is such that would result in innovative, rapid and balance growth of the industry as well as consistent with accepted banking practices. The issue of savings/deposits is central to the regulation and supervision of microfinance. Supervisory authorities are supposed

5302 words - 22 pages
, Security/Assurance, Responsiveness, Convenience, Cost Effectiveness, Problem Handling and Compensation are predictors of perceived value in e-banking.
Keywords:
Service quality,
Brand perception,
Perceived value
Satisfaction,
E-Banking
1. INTRODUCTION
A customer satisfaction is an ambiguous and abstract concept. Actual manifestation of the state of satisfaction will vary from person to person, product to product and service to service. The

1853 words - 8 pages
Microfinance for store owner is another alternative for solving the M&P’s problem. This marketing strategy proposed by Don Lorenzo Servitje. His idea is helping the poor through micro credit in providing further financial services to its M&P’s client. The loan process gave by Fincomun, a microcredit institution who make an alliance with Grupo Bimbo. Salesmen of Grupo Bimbo already knew the client quite well, their business model, their cash

810 words - 4 pages
funds via their BTPN savings accounts. Once a month, a relationship officer visits the customer to request loan repayment. BTPN facilitates repayment with the use of mobile EDC devices, which update the central loan system in real time. See Exhibit 1 for a visual explanation of BTPN’s current micro-lending process.
BTPN’s microfinance process with the use of mobile banking
If BTPN implements mobile banking, the microfinance process will

5241 words - 21 pages
Chapter one: Introduction
1.1 Introduction
This Study focuses on the role of financial markets in the credit disbursement programs and the state of microfinance sector in Bangladesh. Although financial markets are the key source of funds, poor people hardly have access to these markets because of their poor creditworthiness. To serve these people, microfinance sector is doing its best. The sector has undergone tremendous transformation in all

921 words - 4 pages
as may be assigned.
Gaza Field Fixed Term 25 November 2014
07-11-2014
09 Microfinance
PERSONAL & PROFESSIONAL COMPETENCIES           Successful completion of a two-year post secondary course in accountancy, business, marketing or other related commercial discipline At least three years of experience in sales, marketing or banking. Good command of spoken and written Arabic and English Ability to work within a team Effective

1531 words - 7 pages
of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
c. Improving the effectiveness of monetary policy in managing inflation and driving economic growth.
d. Reducing the high cost of cash along the value chain - from the CBN & the banks, to corporations and traders; everyone bears the high costs associated with volume of cash handling.
e

4750 words - 19 pages
LIMITATION OF THE STUDY
This study will be limited to the impact of rural banking on rural farmers. There are a number of factors that boost rural development but very limited mention will be made of them and their impacts. The study will be limited to selected farmers in kabala district.
1.8 ORGANIZATION OF STUDY
The study is divided into five chapters.
Chapter 1 consists of the introduction, objective of the study, statement of the problem

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